Rebate For Deceased Person

[Christian]

An individual called me about their deceased mother who died in January 2020. She will need to file a Form 1041 for her mother's estate. As she passed on in January there will be no need to file a final 1040 BUT a deceased person in 2020 get the rebate so do I file the final 1040? Likely so. They sent her the $1200 well after death so why not an extra $600 to tide her over ? 

[Lee B]

My understanding is that if the taxpayer passed away before January 1, 2021, then the $600 needs to be returned..

[Christian]

Herein lies my confusion. Generally, you are eligible to claim the recovery rebate credit if in 2020 you were a U.S. citizen or U.S. resident alien, weren't a dependent of another taxpayer, and have a valid social security number. This includes someone who died in 2020, if you are preparing a return for that person. Use the Recovery Rebate Credit Worksheet to figure the credit, if any, you can claim. For more information on the recovery rebate credit. Her daughter got the $1200 and my understanding was as yours. Person deceased send it back. I had a few folks who died in 2020 and whose executor got the credit AND never sent it back. Since her daughter has not got the last payment of $600 I think I'll just let a sleeping dog lie. Passing on in January she had insufficient income to require the filing of a final Form 1040. Income post death will require a Form 1041 return.

[Abby Normal]

In my county, to close out a will you must have a final 1040.

I'm not having any clients, deceased or not, sending back payments. And I doubt the IRS will, or even had the capability to, request a return of funds.

[Lion EA]

You want a final 1040 to start the SOL running.

[Christian]

I am not aware of any Virginia statute which requires the filing of a final Form 1040 when the individual has income well below the filing threshold. In this particular instance no income in January of last year. The income falling in 2020 accrued after January.